The S&P 500 is up 16.75% since bottoming on March 30th. That is despite the Iran War and the closing of the strait of Hormuz that the consensus believes should have been a big negative for stocks.
The consensus today is that the outcome of this latest speculative time will be determined by how AI performs, and how it changes our economy, for better or worse.
Everyone on Wall Street will tell you that you need to own stocks because they beat inflation over the long term. What they don’t tell you is that the outperformance comes during the periods when inflation is quiescent.
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Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the
